Pacific National Bank looks to non-resident foreign clients for growth
By J.P. Faber
Pacific National has always had a foreign connection, ever since it arrived in Miami with Ecuadorian ownership in 1985. The irony is that, after transforming itself into a largely domestic U.S. bank, Pacific National is now back in the business of working with foreign nationals looking to invest in assets, principally in real estate.
“Initially, the bank was entirely focused on the Ecuadorian traffic and business,” says Carlos Fernandez-Guzman, president and CEO of Pacific National, who joined the bank in 2010. “Today, we have international accounts from Ecuador [and across South America] but we are 85 percent domestic.” Fernandez-Guzman helped move the bank in that direction after it was bought by a private group from Connecticut in 2014.
At one point, Pacific National’s foreign business dropped down to between four and five percent, says Fernandez-Guzman, but has since then “grown prudently so that we don’t run into any compliance issues.” The CEO expects it to grow further, to about 20 percent of the bank’s business.
Most of Pacific National’s domestic business is in commercial real estate, everything from neighborhood retail centers to Class
B suburban office buildings, even light industrial warehousing. Its international business, meanwhile, falls into two main categories – the purchasing of income-producing real estate as an investment, and the maintenance of cash accounts, “sometimes for safety and sometimes for paying their bills through a U.S. account.”
At present, says Fernandez-Guzman, the bank’s foreign clients are principally from the South American nations of Chile, Argentina, Ecuador, Colombia, and Brazil. “The balance is pretty even among those countries,” he says, “though we are starting to see more out of Uruguay and Paraguay.”
While the bank will finance the purchase of U.S. property by foreign nationals, it does so as a business investment. “The bank does a lot of foreign national financing for folks that want a home they can live in eventually but that can generate income now. We don’t do second homes or consumer loans, but [purchases] held in company names used to generate income,” says Fernandez-Guzman.
Like many Miami area financial institutions, Pacific National Bank is headquartered on Brickell Avenue, once dubbed Wall Street South. And like other banks in the Brickell financial district, it provides a haven for flight capital from the Americas. “When things are bad in Latin America, people want to get their money out,” says David Schwartz, the president and CEO of FIBA (the Miami-based Financial & International Bankers Association). “They are big believers in buying property – whether it’s rental properties or a second home where they will spend time. That has been going on here for time eternal.”
Lately, says Schwartz, the election of new left-leaning governments in Latin America has increased this flow. “There was definitely a pick-up when you saw the elections turning [left] in places like Peru and Chile and Colombia. Whenever there is political uncertainty, that leads to economic uncertainty, and that leads to people saying, “I’m calling my banker in Miami and I’m sending more assets.”
While Pacific National is a relatively small bank (current assets: $1.2 billion), it makes up for that with its expertise in navigating international regulations. “We document well all the international accounts, and ensure they comply with all U.S. laws, so there are no issues in terms of compliance,” says Fernandez-Guzman. “It does add some cost, but not necessarily double or triple the cost of the account. And we have become very good at it, which gives us a competitive advantage for accounts that really don’t want the instability of banks that may not understand the international business as we do.”
